Exhibit m(23)
FORM OF
DISTRIBUTION AND SERVICE PLAN
Variable Insurance Products Fund III: Europe Capital Appreciation
Portfolio
Service Class 2 Shares
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"Act") for Service Class 2 Shares of Europe Capital Appreciation
Portfolio ("Service Class 2"), a class of shares of Europe Capital
Appreciation Portfolio (the "Fund"), a series of Variable Insurance
Products Fund III (the "Trust").
2. The Trust has entered into a General Distribution Agreement on
behalf of the Fund with Fidelity Distributors Corporation (the
"Distributor") under which the Distributor uses all reasonable
efforts, consistent with its other business, to secure purchasers of
the Fund's shares ("Shares"). Such efforts may include, but neither
are required to include nor are limited to, the following: (1)
formulation and implementation of marketing and promotional
activities, such as mail promotions and television, radio, newspaper,
magazine and other mass media advertising; (2) preparation, printing
and distribution of sales literature; (3) preparation, printing and
distribution of prospectuses of the Fund and reports to recipients
other than existing insurance company shareholders; (4) obtaining such
information, analyses and reports with respect to marketing and
promotional activities as the Distributor may, from time to time, deem
advisable; (5) making payments to insurance companies and others
engaged in the sale of Shares or who engage in shareholder support
services; and (6) providing training, marketing and support to such
insurance companies and others with respect to Shares.
3. In accordance with such terms as the Trustees may, from time to
time establish, and in conjunction with its services under the General
Distribution Agreement with respect to Service Class 2 Shares, the
Distributor is hereby expressly authorized to make payments to
insurance companies in connection with the sale of Service Class 2
Shares. Such payments may be paid as a percentage of the dollar amount
of purchases of Service Class 2 Shares attributable to a particular
insurance company, or may take such other form as may be approved by
the Trustees.
4. In consideration of the services provided and the expenses
incurred by the Distributor pursuant to the General Distribution
Agreement and paragraphs 2 and 3 hereof, all with respect to Service
Class 2 Shares:
(a) Service Class 2 shall pay to the Distributor a monthly
distribution fee at the annual rate of 0.25% (or such lesser amount as
the Trustees may, from time to time, determine) of the average daily
net assets of Service Class 2 throughout the month. The determination
of daily net assets shall be made at the close of business each day
throughout the month and computed in the manner specified in the
Fund's then current Prospectus for the determination of the net asset
value of Service Class 2 Shares, but shall exclude assets attributable
to any other class of Shares of the Fund. The Distributor may, but
shall not be required to, use all or any portion of the distribution
fee received pursuant to the Plan to compensate insurance companies or
others who have engaged in the sale of Service Class 2 Shares or in
shareholder support services with respect to Service Class 2 Shares
pursuant to agreements with the Distributor, or to pay any of the
expenses associated with other activities authorized under paragraphs
2 and 3 hereof. Such services may include, but are not limited to, the
following: (1) answering questions about the Fund from owners of
Variable Products; (2) receiving and answering correspondence from
owners of Variable Products (including requests for prospectuses and
statements of additional information for the Fund); (3) performing
sub-accounting with respect to Variable Product values allocated to
the Fund; (4) preparing, printing and distributing reports of values
to Variable Product owners who have values allocated to the Fund; (5)
printing and distributing prospectuses, statements of additional
information, any supplements thereto, and shareholder reports; (6)
preparing, printing and distributing marketing materials for Variable
Products; (7) assisting customers in completing applications for
Variable Products and selecting underlying mutual fund investment
options; (8) preparing, printing and distributing subaccount
performance figures for subaccounts investing in Fund Shares; and (9)
providing other reasonable assistance in connection with the
distribution of Fund Shares to insurers.
5. The Fund presently pays, and will continue to pay, a management
fee to Fidelity Management & Research Company (the "Adviser") pursuant
to a management agreement between the Fund and the Adviser (the
"Management Contract"). It is recognized that the Adviser may use its
management fee revenue, as well as its past profits or its resources
from any other source, to make payment to the Distributor with respect
to any expenses incurred in connection with the distribution of
Service Class 2 Shares, including the activities referred to in
paragraphs 2 and 3 hereof. To the extent that the payment of
management fees by the Fund to the Adviser should be deemed to be
indirect financing of any activity primarily intended to result in the
sale of Service Class 2 Shares within the meaning of Rule 12b-1, then
such payment shall be deemed to be authorized by this Plan.
6. This Plan shall become effective upon the approval by a vote of a
majority of the Trustees of the Trust, including a majority of
Trustees who are not "interested persons" of the Trust (as defined in
the Act) and who have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan (the
"Independent Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan.
7. This Plan shall, unless terminated as hereinafter provided, remain
in effect until April __, 200_, and from year to year thereafter;
provided, however, that such continuance is subject to approval
annually by a vote of a majority of the Trustees of the Trust,
including a majority of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on this Plan. This Plan may
be amended at any time by the Board of Trustees, provided that (a) any
amendment to increase materially the fees provided for in paragraph 4
hereof shall be effective only upon approval by a vote of a majority
of the outstanding voting securities of Service Class 2 and (b) any
material amendment of this Plan shall be effective only upon approval
in the manner provided in the first sentence of this paragraph.
8. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of Service
Class 2.
9. During the existence of this Plan, the Trust shall require the
Adviser and/or the Distributor to provide the Trust, for review by the
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any
activity primarily intended to result in the sale of Service Class 2
Shares (making estimates of such costs where necessary or desirable)
and the purposes for which such expenditures were made.
10. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of Service Class 2 Shares.
11. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, any obligation assumed by
Service Class 2 pursuant to this Plan and any agreement related to
this Plan shall be limited in all cases to Service Class 2 and its
assets and shall not constitute an obligation of any shareholder of
the Trust or of any other class of the Fund, series of the Trust or
class of such series.
12. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
